Economy Alarm: 30 Million Americans Faced With Looming Tax-Hikes
30 Million Americans Faced With Looming Tax-Hikes
Dems‘ Budget Plan Threatens Tax Increases of $3,700
President Obama Has Repeatedly Promised Middle-Class Families Would be Exempt from Tax-Hikes
“Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year.” (Rich Miller, “Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases,” Bloomberg, 2/11/2010)
“He went on to say that the initiatives would ‘focus on easing the burdens on middle-class families who are struggling in this economy, and providing the help they need to get ahead.’ Well, they would ease them a little bit, perhaps, but not much.'” (Michelle Singletary, “President Obama proposals offer modest help to the middle-class,” Washington Post, 1/28/2010)
Credibility Crash: Under Dems’ Budget Plan, 30 Million Americans Could Face Tax-Hikes of $3,700
President Barack Obama’s Democratic allies in the Senate promise to cut the deficit by almost two-thirds over the next five years, but their budget plan could threaten about 30 million people with tax increases averaging $3,700 because of the alternative minimum tax.
The alternative is tax increases elsewhere in the revenue code averaging up to $100 billion a year after 2011 to continue alternative minimum tax relief and also curb taxes on people inheriting large estates.
The Democratic plan released Wednesday by Senate Budget Committee Chairman Kent Conrad of North Dakota relies on such boosts in revenues to carve the deficit from $1.4 trillion last year down to $545 billion by 2015.
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Conrad says lawmakers will have to find revenues elsewhere in the budget to pay for AMT and estate tax relief after 2011, which could require tax increases averaging up to $100 billion a year elsewhere in the code if Congress is going to keep its promises under tough new budget rules.
Conrad says he hopes the dilemma will force Congress to overhaul the complicated and inefficient U.S. tax code. The Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, says that 33 million taxpayers would face the AMT in 2012, adding $3,700 on average to their tax liabilities.
Extending AMT and estate tax relief would cost $300-$400 billion over 2012-2015, Conrad said. Many observers say it’ll be virtually impossible for Congress to produce offsetting revenues to extend the tax relief.
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But in the case of the AMT and estate tax, congressional Democrats have broken with Obama and promise that after two years of deficit-financed alternative minimum tax and estate tax cuts, Congress will have to come up with the money.
“If we want those things taken care of … they’ve got to be paid for,” Conrad said.
That’s easier said than done.
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The annual congressional budget is a nonbinding blueprint for the fiscal year that begins Oct. 1 and sets the parameters for subsequent tax and spending bills. This year, that means a cut of almost $9.5 billion from domestic agency budgets and foreign aid and a freeze, on average, of those accounts for the following two years. (Andrew Taylor, “Millions face tax increases under Dems budget plan,” Associated Press, 4/21/2010)
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